Please note I am based in the uk in case this affects this issue. Sorry it's a long one!

My mum passed away recently and she left a will that stated me, my brother and sister get shares of her house. We didn't think there was anything more left in her estate other than this. However, recently I received a letter from her employer stating that she was part of a scheme which meant she was covered by life insurance policy if she died whilst working 4 x her salary. She only named me and my brother as beneficiaries of this scheme.
There was a considerable amount of money left, I told my sister about this and told her that me and my brother would like to share some of this with her. However my sister wants a third of the money, and this was not what we were expecting.

Our circumstances are that my sister is ten years older than us, she has a fantastic and well paid career as does her partner of 20 years and she has a large property and has a small family (my mum also left some money to her children). Me and my brother are both still young so have not started our families yet and we both still live at home.

I am thinking that my mum took this into account and thought about this decision not wanting us to struggle through life and knowing that my sister is financially secure. However, my sister though thinks my mother must have made a mistake and forgotten to include her name in the policy. She says because it is not in the will my mum must have forgotten about it and it doesn't count that her name isn't on it she still has rights to her share!! I do not agree!

At the moment as it stands I am just going to give her what she is asking for but I would like to pay off the mortgage on the house first before we split it, as this expense is causing me some strain and I feel it will be better in the long run if it is paid off now. However my sister does not want to do this!!

She is really mad at me, I don't want us to fall out about this I just want it to be fair. At the moment it doesn't seem fair, it seems as though my sister is only thinking of herself and not us. She has more to gain from this right now whereas we are thinking of our long term future, she says that it is the here and now that matters and not the future as we might die tomorrow!!

I really don't know what to do, I am so upset that my mum isn't getting her wish and that my sister is being so unreasonble and greedy, next week I am going to see a financial advisor and a solicitor for advice. But if you can, can you please answer the following questions I have?

As this scheme was not included in the will, do me and my brother still have rights over the money?
How do I try and talk my sister round to my way of thinking?
If I pay the mortgage off with my money share will I get it back when the house sells or will I lose out in the end?
Am I being fair, because at the moment she has emotionally blackmalled me into thinking I am the one who is at fault here, in fact she called me a controlling b****!?

Thanks for reading :)

I would say that what is stated in the insurance policy is exactly how your mother wanted it. It would seem unlikely she would accidentally forget to include one of her children when deciding beneficiaries!
I think your reasoning is quite likely the same as your mother's. The younger children have a greater need. I know at the time of doing my own policy, my younger two children stand to receive a bit more than the older two for similar reasons. They have more schooling to finish and are not as self-sufficent at this stage. Policies can, and should, be revisited at different stages.
You don't owe your sister anything... saying that, it was generous of you and your brother to offer to share some with her.
Sadly, as often happens after a death and it is sorted out who gets what, money has turned family members at odds with each other.
I'm not sure how you can handle it without some hurt feelings. You could keep the peace and split it three ways, but you and your brother might harbour some resentment at feeling forced into it. You could pay off the house, which if you plan to stay there for an extended period might be a smart idea, and split the remainder three ways. You could just split the money between you and your brother and face your sister's anger for awhile.
For now, I'd sit tight and see what the financial advisor and solictor have to say.

My mum was ill for 12 months with terminal cancer. She was well prepared and made sure we were all prepared too making sure that we had no worries after she had passed. I am surprised that she kept this from us all, maybe she just didn't expect that this would cause arguments?

Its shocking though what grief can do - it certainly makes you see people for what they really are!

I think I share the same sense of fairness my mother had, and its sound like you do too Doula! Make sure you put something in writing explaining your decision to do this so it doesn't happen to your children! I hate falling out with my sister I love her, this whole thing is very sad.